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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: Lucretius who wrote (12842)2/25/1998 7:04:00 PM
From: david james  Read Replies (1) of 95453
 
Anyone know the typical margins that companies get building drilling rigs?

American Eco (ECGOF) is completing a deal to acquire Dominion Bridge which will include Davie Industries. The CEO of American Eco believes Davie can build 3.5 rigs per year at $150-$200 million per rig and we are trying to figure out what sort of earnings we might expect.

Might want to watch American Eco over the next two days. Earnings will be reported probably tomorrow - Friday at the latest. We are expecting around 37 cents ($1.20 for the year) vs 20 cents in 96. That's 85% growth and the stock currently trades at a trailing 12 month P/E of 11.

With the Dominion Bridge acquisition, American Eco should have revenues in the range of $1 billion in 1998 and with a current market cap of $220 mill, the company is trading at 0.22 of 1998 revenues. The Dominion Bridge revenues have not yet been figured into Eco's estimates for 98, but the CEO believes that the acquisition will be accretive to earnings.

In 1998, American Eco (via MM Industra) will probably be the principle fabricator to the Sable Gas Field project off Nova Scotia bringing gas to the northeast by the end of 1999. And they will be competing with Friedman Goldman for contracts in the Terra Nova Oil project off Newfoundland.

Anyone getting 20% margins building rigs?

David

P.S. Although ECGOF is Canadian registered and gets preference for Canadian contracts - its run out of Houston. The governor of Texas (Mark White) was the previous Chairman of the board.
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